UAE-Israel ties strengthened with NewMed Energy acquisition

The United Arab Emirates’ state oil and gas company and BP announced a tender offer for a stake in a major company on Tuesday israel energy company. Despite political tensions, the proposal demonstrates the UAE’s continued interest in Israel’s gas sector.

BP and Abu Dhabi National Oil Company (ADNOC) have made a non-binding offer to take Israel’s NewMed Energy private and buy a 50% stake in the company. The offer is in line with BP’s planned expansion in the eastern Mediterranean region where NewMed Energy operates. BP and ADNOC plan to form a joint venture in the region, BP said in a release.

Shares in NewMed Energy rose more than 40 percent on Tuesday to close at 10.12 shekels ($2.85) on the news, according to the data.

What does it mean: NewMed Energy, formerly known as Delek Drilling, is a subsidiary of Israel’s Delek Group. NewMed Energy is a company listed on the Tel Aviv Stock Exchange. BP and ADNOC’s proposal would take the company private by buying publicly traded shares.

NewMed Energy said they received the offer on Monday. BP and ADNOC are offering to pay 12.05 shekels ($3.40) per share. The price represents a 72 percent premium to the closing price of 6.996 shekels ($1.97) on the Tel Aviv Stock Exchange, NewMed said in a release.

ADNOC and BP offered to pay around $2 billion for a stake, valuing NewMed Energy at just under $4 billion, according to Reuters.

Why it matters: The offer represents the UAE’s continued interest in Israel’s booming natural gas industry. In 2021, Delek Drilling sold its stake in the Tamar gas field off the coast of Israel to UAE state-owned Mubadala.

The UAE has strongly criticized some statements and decisions made by Israel’s right-wing government this year, but economic cooperation between the two countries remains strong. In addition to the NewMed Energy offer, Israel and UAE launch free trade A deal was reached on Sunday.

learn more: ADNOC also announced an agreement on Monday to explore the feasibility of ammonia as a fuel source in the North Rhine-Westphalia region of northeastern Germany, according to a press release.this followed by ADNOC signs gas supply deal with Germany Last year, European countries sought to reduce their dependence on Russian gas. Israel also wants to increase gas exports to Europe in response to the war in Ukraine.